Debt Consolidation -- Choose Your Credit Counselor Carefully
By Charles Essmeier, Fri Dec 9th

Recently passed by Congress, the Bankruptcy Abuse Prevention andConsumer Protection Act of 2005 will require people who arefiling for bankruptcy to first undergo mandatory creditcounseling.

This is probably not a bad idea; after all, many people withproblem debt could probably benefit from credit counseling. Agood credit counselor can assist clients with problem debts inestablishing a repayment schedule, creating a personal budget,and learning how to avoid debt and credit problems in the future.

The problem is that with the estimated one and a half millionadditional people seeking credit counseling each year, therewill undoubtedly be more credit "counselors" entering themarket, and many of them are only interested in reaping hugeprofits at the expense of their clients. There are already anumber of credit counseling firms working in the marketplacethat advertise themselves as "nonprofit", when they actually areclosely tied to for-profit firms. Theseagencies will strongly encourage their clients to consolidatedebt through their partner company, and the result may be along-term loan for the client that doesn't help them at all, butreaps huge profits for the consolidation firm. How can someonewho is genuinely seeking legitimate, helpful credit counselingchoose a counseling agency wisely?

*Counselors should listen. If they start pitching a solution toyou during the first fifteen minutes you are there, you shouldbe suspicious. A credit counselor should be gatheringinformation about you in order to determine how best to helpyou. They can’t possibly know how to help if they don’tunderstand your problem. Unless, of course, they don’t careabout your problem and only want to sell

generic “solutions.”

*Watch out for firms that want excessive fees up front. Beparticularly wary of nonprofit agencies that ask for fees or“voluntary contributions” or nonprofit agencies that tell youthat they cannot help you if you do not pay a fee upfront.

*Beware of firms that ask for a sizeable fee to obtain a copy ofyour credit report. Such agencies should be able to obtain yourreport at no charge, and you are entitled to one report per yearfor free.

*Sometimes, bankruptcy is unavoidable. Watch out if the agencydoesn’t mention bankruptcy at all, or if they change the subjectif you bring up the topic. Debt consoldators cannot make anymoney on bankruptcy cases, but sometimes, that’s your onlyoption.

*Shop around. Talk to several different agencies and comparewhat they tell you. Any agency that differs dramatically fromwhat the other agencies are telling you should probably beavoided.

*Check with your local Better Business Bureau, and ask ifthey’ve had any complaints about the agency.

*Watch out for firms that offer quick solutions to yourproblems. You didn’t get into financial trouble overnight, andyou won’t get out of financial trouble overnight. Any competentdebt or credit counselor will know this and will undoubtedlytell you that working your way out of debt takes time.

*See if the agency belongs to the National Foundation for CreditCounseling or Association of Independent Consumer CreditCounseling Agencies. Many do.

By taking a few simple precautions before agreeing to work witha credit counselor, you may save yourself a lot of grief and alot of money later.

About the author:©Copyright 2005 by Retro Marketing. Charles Essmeier is theowner of Retro Marketing, a firm devoted to informationalWebsites, including http://www.End-Your-Debt.com/ andhttp://www.HomeEquityHelp.net/